In a perfect world, we would observe a continued steady rise in both labor force participation and the employment-population ratio. This would strengthen the engines of economic growth and prosperity. It would enable the Fed to continue to support the economy in the short-term in a manner than allows more inclusive growth and lowers the probability of an inflation surprise that would force it to hit the brakes in a potentially disruptive manner; and it would make it easier to carry out an orderly normalization of monetary policy. Such data developments also could deliver a necessary component of the scenario that would help validate existing stock market prices while strengthening the foundation that would allow them to go higher over time in a sustainable fashion.
Of course, these issues will not be answered only by the employment report for March that will be released on Friday. A series of additional monthly data observations will be needed, as was the case for determining -- over the past three years -- that the U.S. economy had re-established its pre-crisis standing as one of the most powerful generators of new jobs in the global economy. But these two metrics should move to the forefront of the reporting and assessment of the monthly jobs report.
Mohamed El-Erian is chief economic advisor at Allianz SE.